FCC Rural Broadband Fund Would Shift Money From Existing Program

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The $20 billion proposed initiative would also set higher standards for internet speeds.

The rural broadband fund that Federal Communications Commission Chairman Ajit Pai proposed last week would rely on funding from an existing broadband program slated to expire next year, while also setting higher standards for internet speeds, according to the FCC.

Around $2 billion has been available annually in recent years through the Connect America Fund and that same amount would be shifted to the new fund, dubbed the Rural Digital Opportunity Fund, said Mark Wigfield, a spokesman for the commission, in an email on Tuesday.

The new program, as envisioned, would differ from the Connect America Fund in some key ways, Wigfield said.

For one, he said it would also establish a minimum speed threshold of 25 megabits per second for downloads and 3 megabits per second for uploads, as opposed to 10 mbps and 1 mbps.

And whereas the current “Phase II” of the Connect America Fund is six years, the Rural Digital Opportunity Fund would be a 10-year initiative. The roughly $2 billion annually spread across a decade reflects a $20 billion figure for the fund Pai referenced last week.

The FCC spokesman also said the new program would be “technology neutral” and “open to all qualified providers,” but specifics about applicants that would be eligible would depend on rulemaking.

Deb Socia, executive director of Next Century Cities, characterized the proposal as “more of a rebranding than a new project,” although she was careful to note that details about it are still unclear. “I don't think it's significantly different,” she said by phone Monday.

“We're always happy when more money can go into rural communities,” Socia added. “And we're really pleased to see them upping the speed.”

Arthur Scott, an associate legislative director with the National Association of Counties who focuses on agriculture and rural affairs, also said prioritizing higher speeds is a positive development. He described 10 mbps downloads and 1 mbps uploads as “bare bones.”

“Great if you want to just as a single person stream a Netflix video or something,” he said. But Scott added: “If you’re a small business owner, ten one simply is just not going to cut it.” The same goes, he said, for people working from home or trying to participate in the “gig economy.”

Scott said Monday that nothing he’d learned about the proposal so far had raised concerns.

Now that Pai has proposed the fund, FCC staff will draft a Notice of Proposed Rulemaking for it, which the commission will vote on. After that, there will be proposals issued for public comment. Once that’s complete the commission would need to vote on a final set of rules.

The Connect America Fund evolved as a replacement for the “High Cost Program,” within what's known as the Universal Service Fund.

Historically, the High Cost Program extended federal support to telecommunications carriers to help offset the high costs of delivering telephone service in rural areas and other places it was expensive to offer, a Congressional Research Service report from this year explains.

In 2011, the FCC adopted an order that called for the fund to be transformed in stages to support broadband instead of voice phone service, the report says.

As with the Connect America Fund, funding from the Rural Digital Opportunity Fund, as it’s now proposed, would be awarded through a process described as a “reverse auction.”

During a Connect America Fund auction last year, the FCC allotted $1.48 billion in awards.

One example of a bigger winner in the auction was AMG Technology Investment Group, which provides internet service under the Nextlink brand. It has concentrated on areas in north and central Texas, but had plans to expand in other states, including Iowa, Oklahoma and Nebraska. The firm secured about $281 million through the auction.

Another successful bidder was the Rural Electric Cooperative Consortium, a group of about 20 entities spread across eight states, including places like Arkansas, Virginia and Missouri. The consortium was awarded about $186 million.

These and other winning bidders are required to build out fixed broadband networks over six years in the census blocks where they won federal support through the auction.

Socia said her group would like to see a broader definition of who is eligible for funds like those that have been available through the Connect America Fund, noting that this funding is not currently open to municipalities seeking to work on broadband.

“Anybody who’s willing to provide broadband in a small rural community should be able to participate,” she said. “That would be helpful.”

Bill Lucia is a Senior Reporter with Route Fifty and is based in Olympia, Washington.

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